What is NAV
Net asset value (NAV) is the value of everything a fund owns minus everything it owes, divided by the number of units or shares the fund has issued.
When people say "NAV of a mutual fund", they usually mean NAV per unit: the price at which an open-end fund issues and redeems units, before any sales or exit charges.
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Formula and formal definition
NAV per unit = (total assets − total liabilities) ÷ units outstanding
- Total assets: market value of securities held, cash, dividends and accrued interest receivable, and other receivables.
- Total liabilities: accrued management and custody fees, payables for securities bought, redemptions not yet paid, borrowings and tax provisions.
- Units outstanding: units in issue at the valuation point.
Formally, NAV is struck at a set valuation point, using the fund's pricing policy. Listed securities are valued at closing or official prices. Illiquid holdings are valued at fair value, and the fund's custodian or administrator checks the result.
Worked example
The example below is hypothetical and uses letters instead of amounts.
A fund holds shares and bonds worth S, cash C and interest receivable I. It owes accrued fees F and unpaid redemptions R. It has U units in issue.
NAV per unit = (S + C + I − F − R) ÷ U
How the result changes:
| Event | Effect on NAV per unit |
|---|---|
| Market value of holdings (S) rises, nothing else changes | Rises |
| Fees (F) accrue | Falls slightly |
| Investors buy new units at NAV | No change: assets and U grow in proportion |
| Fund pays a distribution | Falls by about the amount paid per unit on the ex-dividend date |
The last row matters when you compare funds. A fall in NAV after a payout is not a loss to the holder, because the investor received the cash. Use total return or annualized return to compare performance.
Where you see NAV
- Fund fact sheets and monthly reports: NAV per unit, fund size (total net assets) and NAV history.
- Asset manager websites and newspapers: daily NAV tables. Some funds also show offer and redemption prices that include loads.
- Exchange-traded funds: the published NAV next to the market price. Some exchanges also publish an intraday indicative NAV (iNAV). See exchange-traded products.
- News: "the fund trades at a discount to NAV" or "NAV fell after the market drop".
On a trading platform, the closest everyday figure for your own account is equity: balance plus or minus open profit and loss. Your equity curve works like a personal NAV history.
Edge cases for experienced readers
- Premium and discount: units of closed-end funds and ETFs trade on an exchange at market prices that can differ from NAV. The gap is widest in stressed or illiquid markets.
- Forward pricing: open-end funds usually deal at the next NAV calculated after your order is received, not the last published one.
- Stale prices: holdings in markets that closed earlier, or assets that trade rarely, can make NAV lag the real value. Funds use fair-value adjustments to deal with this.
- NAV vs book value: book value uses accounting values of a company's assets. NAV marks a fund's holdings to market.
- NAV vs face value: the initial unit price at launch says nothing about current value.
Any CFD traded on a fund or index is leveraged. Its price can move away from the underlying NAV, and losses can come quickly.
Related terms
Exchange-traded note (ETN) · Asset class · Custodian · Saving, investing, loans · Trading glossary
Frequent questions
What does NAV mean in a mutual fund?
It is the fund's net assets divided by units in issue: the per-unit value at which units are issued and redeemed.
Is a lower NAV a cheaper fund?
No. NAV per unit depends on the launch price and past payouts. It does not show value or future returns.
How often is NAV calculated?
Most open-end funds calculate NAV each business day at a set valuation point. The fund's offering document states the schedule.
Why does an ETF price differ from its NAV?
The ETF trades on an exchange through the day, while NAV is calculated at a fixed time. Supply, demand and liquidity create a premium or discount.